America West To Further Amend Application For Federal Loan Guarantees

19th Dec 2001

America West Airlines (NYSE: AWA)
announced that later today it would further amend its application for federal
loan guarantees under the Air Transportation Safety and Stabilization Act
following continued discussions with the Stabilization Board and its staff.

The company`s amended application includes a revised loan structure that
reduces the portion of the loan guaranteed by the government from $400 million
to $380 million, or approximately 85 percent of the $445 million loan, and now
includes lenders with no material interest in or exposure to the company.

Additionally, America West`s seven-year business plan was revised to
reflect actual 2001 financial performance, which is better than forecast in
the company`s original application, as well as an increase in recently
negotiated concessions. The net effect of these adjustments is a seven-year
plan that demonstrates America West`s ability to repay the loan and retain
comfortable cash balances of nearly $600 million.

“We remain very confident that America West`s application is in a form
that can and should be approved,” said W. Douglas Parker, chairman, president
and chief executive officer. “Our application continues to show that America
West is important to the efficiency and viability of the U.S. airline
industry. As amended, our application meets the latest demands of the
Stabilization Board, demonstrates increased comfort regarding loan repayment
and increases compensation to the U.S. taxpayers.”

“Our business plan, which includes very conservative and reasonable
assumptions about the industry`s recovery and America West`s ability to
outperform the industry, clearly demonstrates the company`s ability to repay
the loan,” added Parker. “We are so confident our seven-year plan assumptions
are reasonable that we have made it available to the public.” America West
disclosed its seven-year plan through an 8-K filing with the Securities and
Exchange Commission yesterday.

Included in the revised application are third-party reviews of the
company`s business plan by two highly regarded aviation consulting firms, as
well as credit assessments conducted by or for the proposed lenders, all of
which conclude that America West`s business plan is viable and the loan is
prudently incurred. Additionally, the numerous creditors and business
partners providing the more than $600 million in concessions, and their
advisors, have reviewed the plan and reached similar conclusions.

As a result of the even higher commitment to concessions, the improving
economic outlook and the comfortable margin for error inherent in the
seven-year plan, America West also enhanced its application by including a
$3.8 million (1 percent) upfront fee and reducing the loan`s average
amortization from 5.8 years to 4.5 years. The total returns to taxpayers are
now well in excess of the terms of a private commercial loan America West had
negotiated in August 2001, but which never closed due to the terrorist attacks
of September 11.

On November 13, America West submitted an application to the Stabilization
Board, outlining its success as a post-deregulation carrier, its solid
financial and competitive position prior to September 11, a sound business
plan and nearly $600 million in concessions and contributions that would
result from the loan guarantees.

Following discussions with staff members of the Board, the company amended
its application on December 10 to include even more conservative business
model assumptions regarding the rebound of the U.S. airline industry, a
bottom-up seven-year forecast for each of its routes served and a revised loan
structure including an increase in the at-risk portion of the loan.
Additionally, returns to taxpayers were significantly increased through cash
payments as well as the addition of warrants to acquire approximately
3.4 million Class B shares of America West Holdings Corporation.

“Our application for federal loan guarantees clearly meets Congressional
intent, the requirements and regulations governing the Loan Guarantee Program
and the spirit of the Stabilization Act,” added Parker. “It sets an
exceptionally high hurdle for those that will follow. We continue to believe
that the approval of America West`s application is in the best interests of
airline competition, the traveling public and the U.S. economy.”

This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties that could cause America West`s actual results and financial
position to differ materially from these statements. The risks and
uncertainties include, but are not limited to, the aftermath of the September
11 terrorist attacks, the resulting negative impacts on revenues due to
airport closures and reduced demand for air travel, increased costs due to
enhanced security measures and related government directives, the ability of
the company to obtain sufficient financing to survive the adverse economic
effects of the September 11 attacks, including, without limitation, the risk
that America West`s application for loan guarantees under the Air Carrier Loan
Guarantee Program might not be approved, limitations on financing flexibility
due to high levels of debt and financial and other covenants in debt
instruments and cross default provisions, the cyclical nature of the airline
industry, competitive practices in the industry, the impact of changes in fuel
prices, relations with unionized employees generally and the impact of the
process of negotiation of labor contracts on the company`s operations, the
outcome of negotiations of collective bargaining agreements and the impact of
these agreements on labor costs, the impact of industry regulations and other
factors described from time to time in the company`s publicly available SEC
reports. The company undertakes no obligation to publicly update any
forward-looking statement to reflect events or circumstances that may arise
after the date of this press release.